JOHN PAUL JONES HOSPITAL
1. Target Overview & Investment Thesis
JOHN PAUL JONES HOSPITAL is a 21-bed under-performing / distressed in WILCOX, AL with $2.8M in net patient revenue and a -80.3% operating margin. The hospital serves a payer mix of 20.0% Medicare, 11.4% Medicaid, and 68.6% commercial.
Thesis: Turnaround. Our ML models identify $222K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -80.3% to -72.5% (+788bps).
| Net Revenue HCRIS | $2.8M |
| Current EBITDA COMPUTED | $-2.3M |
| Operating Margin COMPUTED | -80.3% |
| Occupancy HCRIS | 4.7% |
| Revenue / Bed COMPUTED | $134K |
| Net-to-Gross HCRIS | 36.3% |
| Distress Probability ML | 61.9% |
2. Market Context & Competitive Position
AL has 115 Medicare-certified hospitals with a median operating margin of -8.5%. The target's margin of -80.3% places it below the state median. Among 37 size-comparable peers (10-42 beds), the median margin is -13.4%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (10-42), prioritizing same-state peers. 37 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| JOHN PAUL JONES HOSPITAL (Target) | AL | 21 | $2.8M | -80.3% |
| NORTH BALDWIN INFIRMARY | AL | 35 | $55.3M | -3.3% |
| ST. VINCENTS ST. CLAIR | AL | 40 | $40.8M | 8.7% |
| TROY REGIONAL MEDICAL CENTER | AL | 41 | $39.0M | -9.1% |
| ST. VINCENTS CHILTON | AL | 26 | $29.1M | 9.2% |
| ST. VINCENTS BLOUNT | AL | 25 | $25.2M | -33.1% |
| NORTHWEST MEDICAL CENTER | AL | 28 | $23.8M | -12.1% |
| FAYETTE MEDICAL CENTER | AL | 32 | $23.6M | -20.8% |
| WIREGRASS MEDICAL CENTER | AL | 33 | $21.0M | -14.2% |
4. Predicted Improvement Opportunities
Improvement targets set at P75 of comparable peers with 60% gap closure assumption. Coefficients calibrated to published research bands. Total EBITDA uplift: $222K (788bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Denial Rate Reduction | 12.0% | 6.5% | $63K | +222bp | 12mo |
| Net Collection Rate | 93.5% | 97.0% | $59K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $56K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $34K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +34bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-2.3M |
| + RCM Uplift | +$222K |
| Pro Forma EBITDA | $-2.0M |
| Current Margin | -80.3% |
| Pro Forma Margin | -72.5% |
| WC Released (1x) | $108K |
6. Returns Analysis — Scenario Matrix
5-year hold, 5.5x leverage, 3% organic growth, 10%/yr debt paydown. Base case uses 100% of predicted RCM uplift. Bull case: 130% uplift at lower entry. Bear case: 50% uplift at higher entry.
| Scenario | Entry | Exit | Equity In | Equity Out | MOIC | IRR |
|---|---|---|---|---|---|---|
| Base Case | 10.0x | 10.0x | $-3.5M | $-12.7M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-3.5M | $-15.1M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-3.1M | $-15.5M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-3.1M | $-17.9M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-3.8M | $-12.7M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-3.8M | $-15.2M | 0.00x | -100.0% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| High | Negative operating margin | RCM uplift bridge shows clear path to profitability; working capital release provides near-term cash cushion |
| Medium | Low occupancy | At 4.7%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
| High | Elevated distress probability | Model estimates 61.9% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
8. Data Sources & Methodology Appendix
Data Sources
- CMS HCRIS Cost Reports (Medicare-certified hospitals)
- CMS Medicare Utilization (DRG-level volumes)
- CMS Chronic Conditions (county-level disease prevalence)
- HCRIS multi-year trend data (financial time series)
Comparable Selection
- 37 hospitals with 10-42 beds
- Same-state prioritization (n=38)
- Comp margins: P25=-30.5% / P50=-13.4% / P75=-2.6%
Bridge Methodology
- Targets: P75 of comparable peers (60% gap closure)
- Denial: avoidable share = 35% of delta × NPR
- AR: bad debt coefficient = $0.65 per day per $1K NPR
- NCR: 60% coefficient on collection rate improvement
- CDI: 0.75% of Medicare revenue per 0.01 CMI point
Returns Assumptions
- Leverage: 5.5x entry (84.6% debt / 15.4% equity)
- Organic growth: 3% annual EBITDA growth
- Debt paydown: 10% of principal per year
- Hold period: 5 years
Generated by SeekingChartis on April 26, 2026. All predictions use public data only. Confidence intervals calibrated via split conformal prediction (90% coverage target). This memo is for informational purposes and does not constitute investment advice.